Canada's CGI posts 52 percent jump in profit, eyes acquisitions

By Alastair Sharp

3 Min Read

TORONTO (Reuters) - Canadian computer services provider CGI Group (GIBa.TO) posted a 52 percent rise in fourth-quarter profit on Thursday, and said it was looking at new buying opportunities as it completed the integration of Logica, which gives the company a major boost in Europe.

The Montreal-based company, which had lost the contract to manage last year's U.S. healthcare plan known as Obamacare after a botched launch, said it had since finished work on a range of state-based healthcare projects.

"We successfully completed the remaining U.S. healthcare exchange projects resulting in a notable performance improvement in the second half of the year," Chief Executive Michael Roach told analysts on a conference call.

He said CGI had improved its position with respect to U.S. federal government business despite ongoing industry-wide delays.

CGI, one of Canada's largest technology companies, has diversified its customer base thanks to acquisitions including the 2012 purchase of UK-based Logica, for which integrations costs have now been fully accounted for.

It gets roughly a quarter of its revenue from the U.S., with 10 percent-plus contributions from Canada, Britain and France.

Roach said the company could look for acquisitions to grow its U.S. and UK commercial businesses, to consolidate a fragmented market in Australia, and to grow in Eastern Europe.

The company on Wednesday said it would team up with Dell to offer cloud-based solutions to governments and commercial clients worldwide.

CGI's backlog of signed orders slipped to C$18.2 billion in the quarter and the company booked C$2.0 billion worth of contracts, which was also a decline from a year earlier.

Investors are keen to see the company get orders for more work than it finishes each quarter, as this points to growth.

CGI had a net profit of C$213.7 million ($188.9 million), or 67 Canadian cents a share, compared with C$141.0 million, or 44 cents a share, a year earlier.

Excluding integration costs and tax adjustments, the company earned 73 Canadian cents a share, while revenue rose slightly to C$2.48 billion.

Analysts had on average expected CGI to earn 73.3 Canadian cents a share on revenue of C$2.57 billion, according to Thomson Reuters I/B/E/S.